Features of Corporate Bonds explained
Corporate bonds are debt securities issued by private and public corporations. Companies issue corporate bonds to raise money for a variety of purposes, such as building a new plant, purchasing equipment, or growing the business. An investor who buys a corporate bond is effectively lending money to the company in return for a series of…
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Convertible bonds, floating rate bonds and negative bonds
Convertible Bonds: Convertible bonds are exceptional securities that have features of both bonds and equity options. The holders of convertible bonds have the opportunity to convert bonds held by them into specified number of company’s equity shares during validity period for options mentioned in the bonds. The bond holder also receives the coupon payment till…
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RBI’s Bold Move: Repo Slashed by 50 BPS, CRR by 100 BPS to Boost Liquidity
In line with the market expectations, the Reserve Bank of India’s Monetary Policy Committee (MPC) on Friday cut the repo rate by 50 basis points (bps) to 5.5%, marking the third consecutive rate reduction this year. The panel further decided to shift its stance from accommodative to neutral. A neutral stance typically signifies that the…
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Understanding Bonds, Coupons and Yield to Maturity
(This post explicates the difference between coupon rate and yield to maturity) Bonds: A bond is a debt instrument issued by a company or the Government to raise capital by way of borrowing from the investors. The investors in the bonds are debt holders (lenders/creditors). The issuer of bonds is obliged to pay bondholders the…
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Do you know the meaning of Masala bonds?
Masala Bonds are debt instruments that help to raise money in local currency from foreign investors. Both the government and private entities can issue these bonds. They work just like any other normal bond, but can only be issued outside India. The issue of these bonds is in Indian currency rather than the local currency…
What is a Foreign Currency Convertible Bond?
A foreign currency convertible bond (FCCB) is a special kind of convertible bond issued in a currency different than the issuer’s domestic currency. Multinational companies and governments routinely issue bonds denominated in various currencies to benefit from lower borrowing costs, and also match their currency inflows and outflows. FCCB gives investors an opportunity to convert…
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